Various Forex Indicators

Price fluctuations and variations are common in stock market. It is all a game of probabilities and statistics. Many people fear to invest in stock market. False promises and hyped stories of investors who hit crores or lost completely make an average investor think about investing in stocks. But a basic understanding of the way a stock market works makes your work easy and it will not take much time to realise that it is a worthy investment particularly forex market if you know things like топ 10 индикаторов форекс.

There are many things which influence a stock market. They might be anything like specific company rules like announcement of profits and dividends, change in management, new contracts with other companies etc or investors’ views about the market like bull market or bear market or economic factors like Inflation, Interest rates by world banks some of the major factors affecting price rise and fall in stock markets.

Apart from stock market shares, there are also indicators which determine foreign exchange market. Foreign exchange means converting one country’s currency in to another.Factors like demand and supply influence foreign exchange market. A country can profit by means of trade, tourism, foreign investments and political factors. For example, a tourist has to exchange his/ her currency for the hosting country’s currency in order to buy goods and services in the local country. Let’s understand топ 10 индикаторов форекс and their role in influencing foreign exchange market.

What is a forex indicator?

Currency traders use some techniques to make analysis of price trends and currency fluctuations. These are based on probabilities and permutations and are helpful statistical tools in determining price actions. There are widely known indicators like Average true range (ATR), Relative Strength Index) ,Moving Averages and so on. They are differed as lagging indicators, confirming indicators etc. Depending on the currency one is dealing with he/she can choose the kind of indicator. As soon as you begin to do, you can find lot of indicators which might confuse you as to which should be formulated. To avoid this, one has to choose indicators with utmost care.

Top 10 forex indicators:

Average True Range: This tool, developed by Welles wilder, is used more to prepare a trade plan by understanding the recent happenings in the volatility of prices. This may not prove much in deciding future price movements. You can set up entry points and stops to avoid being knocked out. This is the biggest advantage you can have with this.

Certain trading soft wares like Metatrader 4 use this tool. To calculate you need to follow these simple steps:

a) First of all, select a time period and compute the “highest” minus “lowest”.

B) Then calculate the difference between the “high” and earlier period’s “close”

c) The earlier period’s close minus the “Low”. Whichever is the greatest value among the above three will be the ATR.

Simple Moving Average: This is measured with the help of arithmetic mean by calculating average price for a selective period of time. That means if you are calculating it for 1 month it will simply be the last 30 days’ mean of the closing prices.

Once the price movements are well filtered it will be easier to analyse the trend. Since it is a lagging indicator, it takes the average prices of the past and once the price trend begins it starts to give out signals.Here you should identify that as SMA keeps increasing the reaction to changes in the market will be slower. Whereas if it is shorter, it will have quick response to changes. It can be best used to confirm a trend but when it comes to signalling about a move it cannot work so well.

Exponential Moving Average: This is also like Simple Moving Average with only difference of concentrating more on fresh prices. Whenever the two moving averages collide you can start trading. When a shorter moving average is slightly above the slower moving average you can buy and sell when it is vice versa. You can always short or long the currency position with this method. Similarly you can start new trade when shorter MA is ahead of longer MA by exiting the present one. But do not choose this indicator if you are not regular in the market.

The Bollinger band: This is a volatility channel used to analyse a trend. It calculates on the assumption that if a price heads above moving average trend might have started. This is analysed by calculating standard deviation which helps in identifying volatility. Bollinger band and volatility are interdependent. When volatility increases it expands and when volatility decreases it contracts. Ideally it takes two aspects in to consideration- numberof days for the moving average and number of standard deviations that should be kept away from the moving average.

Fibonacci retracement: This comes from the famous Fibonacci series from where the proportions are drawn. In the series the following numbers will be the sum of previous two numbers in the series. That means the series will be 0, 1, 1, 2, 4, 8 etc. Fibonacci ratios are calculated based on the series, one of the most important ratio being 0.618 which comes from 89/144= 0.618.

This theory states that after a phenomenal move in the price, there will be resistance in prices near to Fibonacci ratios. So this defines price trend even before it starts.

Relative Strength Index: RSI can help you when you have an extra currency to be bought or sold. It can be used both for price trending and price ranging. It also helps to determine better entry and exit prices.

Stochastics: Just like RSI stochastics also help you in trading extra bought or sold currencies. This has two lines %k and %D which signify our entry.

Hercules Meta4 scalping indicator: This indicator can be used for all forex pairs including Gold. Many users of late have indicated 80% profitability with this.

Automatic double top finder and indicator: This is mainly used to find double top and double bottom graph patterns. This can also be used for any currency pairs.

Apart from the above, there are other indicators like MT4 indicator in multiple time frames, BPNN predictor indicator, Psych indicator etc which are commonly in use and are proved to work. But it depends on the traders’ choice as to which indicator to be used. It again depends on the type of currency pair that he/ she is trading.

You must be logged in to post a comment